Energy Efficiency

Tom Konrad CFA Geothermal Heat Pumps (GHP) are a niche market.  They shouldn’t be. Disclosure: Long WFIFF, short LXU puts (a net long position.) A Better Mousetrap? Ralph Waldo Emerson never said “Build a better mousetrap, and the world will beat a path to your door.”  The mousetrap that likely inspired the misquote was invented seven years after his death.  Unfortunately, many people take it literally.  GHPs have all the hallmarks of a better mousetrap: They do the job of heating and cooling a building more efficiently than any other option.  Despite...

I don't write frequently about solar stocks, especially photovoltaic (PV) manufacturers.  While the industry is almost certain to be a spectacular growth story, it's also a story that everyone already seems to know about.  Trader Mark put it well: "these stocks are too driven by retail hands."  The PV story clicks with people, and when that happens, they often buy stocks with little regard to what they are worth.  PV stocks are so psychological, we'd all do well to lie down on a couch before buying. As the IRS is unlikely to allow psychotherapy as an "investing expense," I...

by Debra Fiakas CFA On Monday Orion Energy Systems (OESX:  NYSE) issued a press release to reiterate previous guidance for sales in the quarter ending March 2015.  Given that the quarter has already ended, it is more like a pre-announcement of results than guidance.  At any rate management has indicated the results, when finally reported will bring sales for the fiscal year ending March 2015, to some point in a range of $72 million to $74 million. The announcement might not be so much motivated by a need to assure shareholders of financial performance, as much as...

by Debra Fiakas CFA Last week Lime Energy (LIME:  Nasdaq) reported exceptional sales growth in the quarter ending June 2015.  Revenue from the company’s energy efficiency solutions was $32 million, increasing and impressive 135% compared to a year ago.  Sales were boosted beginning by the March 2015 acquisition of EnerPath, a provider of software solutions for utility energy efficiency.  However, several of the company’s utility programs were expanded and that drove organic sales as well. Is it time to give Lime some new respect? In the renewable energy sector, efficiency programs are often overlooked...

by Debra Fiakas CFA In early December 2014, Energy Recovery (ERII:  Nasdaq) staged an analyst and investor event in New York City principally to introduce its most recent technology innovation, VorTeq.  The product is a hydraulic fracturing solution for the gas industry.  Unlike its other products, the VorTeq is a colossal apparatus requiring a semi-tractor to transport it into place as a replacement for the ‘missiles’ now found at natural gas well sites. VorTeq Animation In the current configuration, high pressure pumps are used to drive a blend of fracturing sand, water and chemicals down into the well hole.  Pump components,...

The Solar Investment Tax Credit has been extended, and the market for mortgage debt "rescued," but neither renewable energy nor the rest of the economy are out of the woods.  We'll probably be feeling the effects of the financial imbalances which have built up in our economy for years to come. While the extension of the tax credit will help renewable energy technologies raise funding, the headwinds from the continued fallout of the structured finance and real estate bubble will be blowing in the other direction.  This will be a problem both for developers of new technologies, and...

Tom Konrad CFA Last week, a prominent display of $10 LED light bulbs from Cree, Inc. (NASD:CREE) arrested my attention as I entered a home improvement store. These were officially launched in March, and are similar to a 40 watt-equivalent bulb I bought in 2009.  I still have that bulb, which I use for outdoor lighting, because Compact Fluorescent Lights (CFLs) take too long to warm up in the winter.  It’s still going strong.  The only problem: it cost $50, and used as much energy as a CFL for the same amount of light. Four years later, we have...

Tom Konrad, CFA Apple takes on Google in Silicon Valley rivalry to save the world... first.   Recently appointed Apple (NASD:AAPL) senior VP of Energy Lester Coulson is unimpressed by Google's (GOOG) efforts to solve climate change.  "Google has been trying to make renewable energy cheaper than coal for more than three years now, and we haven't even seen a Beta version!" Coulson admonishes.  "Sure, they've made a few headlines by investing in EGS and planning to string wires up and down the Atlantic coast, but after investing $100 million, is renewable energy cheaper than...

As I mentioned in a previous post (and also a purchase of LSGP.ob), I have become very interested in the potential investment opportunities in companies that are involved in the conversion of typical halogen and incandescent lighting over to solid state lighting (i.e. LED.) With that said, I wanted to pull back the curtain to show you my process and thinking when I enter a new investment space. The potential returns for the companies in this space can be quite large over the next 10 years. Many municipalities and large corporations are looking at the potential...

With the resignation of four non-independent directors and reduction in the size of LSB’s board, the company has managed to appear to be making a step towards reform while making it harder for the activist fund to gain influence. Gaining influence in a tightly controlled family firm is never easy. It looks like the task just got significantly harder for Engine Capital in its quest to unlock shareholder value at LSB.

Lighting Science Group Corp. (LSGP.OB) announced an order for 1,000 of Lighting Science's Optimized Digital Lighting(TM) (ODL(TM)) Low Bay lighting fixtures from Amtech Lighting Services, an ABM Industries Incorporated subsidiary, which is one of the nation's largest lighting management companies. Lighting Science expects to begin shipping the products during the second quarter for installation in select garages operated by AMPCO System Parking, another ABM subsidiary, and in AMPCO client garages. The nation's estimated 40,000 garage facilities provide an excellent platform for Lighting Science to launch their low bay fixtures given the high cost of electricity and the demand...

Tom Konrad CFA The high upfront cost of efficient buildings (and efficiency in general) is more than offset by the significant long term rewards, as you can see from the McKinsey chart below. Despite the long term benefits, the upfront cost is often a barrier, especially to government entities in today's tight budgetary environment. Performance contracting offers them a way to square the circle between the long term budget benefits of efficient buildings and the often significant capital cost. This works by funding the capital improvement with debt secured by future energy savings. An...

In the future, I plan to avoid doing lists of ten stocks. I've found the writing to be somewhat repetitious, and I suspect some readers feel the same way.  Look for more threes and fives. That said, there are more than enough solid companies with strong clean energy arms.  These companies are my favorite investments right now, both because I think that now is a time to play it very safe in the stock market (I'm also increasing my cash reserve), and because these companies allow me to use Cash Covered Puts. Since I do have several...

On Monday, I wrote that I wouldn't buy a house without an energy audit.  For now, I'm in the minority, but I don't expect that to last.  Each of these trends is likely to lead to more homes getting energy audits: Rising energy costs: as energy prices rise, knowing what to do to improve your home's energy efficiency will become more valuable. Weak real estate market.  Now that the boom is past us, new home builders need to put more effort into providing and advertising a quality product in order to attract buyers and stay in business. ...

Distributed Energy Systems Corp (DESC) has been awarded a $3.4 million contract by AEGON USA Realty Advisors. Under the agreement, they will install and commission a 1.1 megawatt (MW) combined heat and power (CHP) system for the landmark Transamerica Pyramid at 600 Montgomery Street in San Francisco, California. The 48-story building, managed by Lowe Enterprises, is known as the "Pyramid," and is located in the heart of San Francisco's financial district.

by Tom Konrad Last February, I wrote " I expect the Fed-induced reprieve to be fairly short lived, ten solid companies I'd be happy to buy more of if and when the bottom really falls out of the market."  When I wrote those words, the Dow Jones Industrial Average was over 12,700.  Now, it's around 8,500, and I doubt anyone remembers the "Fed-induced reprieve" I was referring to.  The "bottom fell out" in September and October.    On October 12, with the DJIA at 8451, I wrote "I don’t know where the market will go from here, but I...